Altice France S.A. Condensed interim consolidated financial statements

Transcription

1 Condensed interim consolidated financial statements As of and for the nine-month period ended September 30, 2018

2 Consolidated Statement of Income September 30, September 30, ( m) restated (*) Revenues 7, ,113.2 Purchasing and subcontracting (2,446.1) (2,989.8) Other operating expenses (1,686.9) (1,784.2) Staff costs and employee benefit expenses (650.8) (680.9) Depreciation, amortization and impairment (1,911.9) (2,005.6) Non-recurring income and expenses (324.4) (958.4) Operating income (305.6) Financial income Cost of gross financial debt (600.8) (666.3) Other financial expenses (210.6) (40.8) Net financial income (expense) (806.4) (703.7) Share in net income (loss) of associates (8.5) (8.4) Income (loss) before taxes (275.1) (1,017.7) Income tax income (expense) (34.8) Net income (loss) from continuing operations (309.8) (778.8) Net income (loss) from discontinued operations - - Net income (loss) (309.8) (778.8) Group share (307.8) (772.5) Non-controlling interests (2.0) (6.3) (*) Refer to Note 20 Restated information

3 Consolidated Statement of comprehensive Income September 30, September 30, ( m) restated (*) Net income (loss) (309.8) (778.8) Items that may be subsequently reclassified to profit or loss : Foreign currency translation adjustments Cash flow hedges (76.7) Related taxes 19.8 (38.7) Other items related to associates Items that will not be subsequently reclassified to profit or loss : Actuarial gain (loss) (0.2) (0.0) Related taxes Comprehensive income (loss) (365.9) (666.4) Of which : Comprehensive income (loss), Group share (364.0) (660.1) Comprehensive income (loss), Non-controlling interests (2.0) (6.3) (*) Refer to Note 20 Restated information 1

4 Consolidated Statement of Financial Position September 30, December 31, ( m) restated (*) Assets Goodwill 11, ,199.2 Intangible assets 6, ,518.7 Contracts costs Property, plant and equipment 6, ,424.2 Investments in associates Non-current financial assets Deferred tax assets Other non-current assets Non-current assets 25, ,259.4 Inventories Trade and other receivables 3, ,616.4 Contracts assets Income tax receivable Current financial assets Cash and cash equivalents Assets held for sale - (0.0) Current assets 4, ,790.7 Total Assets 29, ,050.1 September 30, December 31, ( m) restated (*) Equity and liabilities Share capital Additional paid- in capital 5, ,403.1 Reserves (3,374) (2,738) Equity attributable to owners of the company 2, ,108.4 Non-controlling interests 6.5 (85) Consolidated equity 2, ,023.3 Non-current borrowings and other financial liabilities 17, ,854.4 Other non-current financial liabilities Non-current provisions Non-current contracts liabilities Deferred tax liabilities Other non-current liabilities Non-current liabilities 18, ,503.0 Current borrowings and financial liabilities Other current financial liabilities 1, ,106.9 Trade payables and other liabilities 5, ,045.3 Current contracts liabilities Income tax liabilities Current provisions Other current liabilities Liabilities directly associated to assets held for sale - (0.0) Current liabilities 8, ,523.8 Total Equity & liabilities 29, ,050.1 (*) Refer to Note 20 Restated information 2

5 Consolidated Statement of Changes in Equity Capital Equity attributable to owners of the company Additional paid-in capital Reserves Other comprehensive income Total Noncontrolling interests Consolidated equity ( m) Position at December 31, ,388.0 (1,854.2) (367.2) 3,609.1 (37.4) 3,571.7 IFRS 15 - Retrospective application Restated position at December 31, ,388.0 (1,603.4) (367.2) 3,860.0 (37.4) 3,822.5 Dividends paid (6.9) (6.9) Comprehensive income - - (772.5) (660.1) (6.3) (666.4) Issuance of new shares Share-based compensation Purchase of treasury shares Other movements (a) - - (53.0) - (53.0) (22.1) (75.1) Restated position at September 30, ,403.1 (2,426.5) (254.8) 3,165.5 (72.7) 3,092.7 Comprehensive income (loss) (78.4) (68.2) (15.3) (83.5) Issuance of new shares Share-based compensation Purchase of treasury shares Other movements Restated position at December 31, ,403.1 (2,405.1) (333.2) 3,108.4 (85.1) 3,023.3 IFRS 9 - Prospective application Position at January 1st, ,403.1 (2,383.7) (333.2) 3,129.8 (85.1) 3,044.7 Dividends paid Comprehensive income (loss) - - (307.8) (56.1) (364.0) (2.0) (365.9) Business combination under common control (b) - - (94.8) - (94.8) 7.2 (87.6) Additional participation in ACL and GNP (c) - - (108.4) - (108.4) 78.8 (29.6) Other movements (d) - - (90.4) - (90.4) (7.6) (82.8) Position at September 30, ,403.1 (2,985.1) (389.3) 2, ,478.8 (a) Of which compensation paid to SFR Group stock-options holders following the buyout offer: 34.1 million (Refer to Note 26 - Sharebased payments in the Group s 2017 annual consolidated financial statements). (b) Refer to Note 2 Significant events of the period - Acquisition of ACS ATSF and MCS and Note 3 Change in scope. (c) Refer to Note 2 Significant events of the period - Exclusive control over NextradioTV. (d) Of which additional participation in ERT Luxembourg : (42.0) million, additional participation in DTV Holding : (32.8) million. Breakdown of Changes in Equity Related to Other Comprehensive income ( m) December 31, 2016 restated (*) September 30, Change 2017 restated (*) December 31, September 30, Change 2017 restated (*) 2018 Hedging instruments (498.3) (348.5) (441.8) (518.5) (76.7) Related taxes (38.7) Actuarial gains and losses (10.4) (10.4) (0.0) (9.5) (9.6) (0.1) Related taxes Foreign currency translation adjustments (2.0) (1.2) 0.8 (1.1) (0.6) 0.5 Items related to associates Total (367.2) (254.8) (333.3) (389.3) (56.1) (*) Refer to Note 20 Restated information 3

6 Consolidated Statement of Cash Flows September 30, September 30, ( m) restated (*) Net income (loss), Group share (307.8) (772.5) Adjustments: Non-controlling interests (2.0) (6.3) Depreciation, amortization and provisions 1, ,061.8 Share in net income (loss) of associates Net income from sale of property, plant and equipment and intangible assets (19.2) 82.2 Net financial expense (income) Income tax expense (income) 34.8 (238.9) Other non-cash items 39.9 (58.2) Income tax paid (39.9) (174.4) Change in working capital (a) (38.3) Net cash flow provided (used) by operating activities 2, ,063.2 Acquisitions of property, plant and equipment and intangible assets (1,659.6) (1,679.9) Acquisition of consolidated entities, net of cash acquired (127.0) (135.2) Acquisitions of other financial assets (36.9) (19.2) Disposals of property, plant and equipment and intangible assets Disposal of consolidated entities, net of cash disposals Disposal of other financial assets Change in working capital related to property, plant and equipment and intangible assets (85.9) (268.7) Net cash flow provided (used) by investing activities (1,806.8) (2,023.2) Purchases of treasury shares Capital increase Dividends paid - (6.9) - to owners of the company to non-controlling interests 0.0 (6.9) Dividends received Issuance of debt 5, ,478.2 Repayment of debt (4,817.6) (2,493.4) Interest paid (702.3) (785.2) Other flows from financing activities (b) Net cash flow provided (used) by financing activities (445.0) (89.0) Net increase (decrease) in cash and cash equivalents (38.8) (49.1) Exchange rate impact on cash in foreign currencies (25.3) 0.2 Net cash and cash equivalents at beginning of period Net cash and cash equivalents at end of period of which cash and cash equivalents of which bank overdrafts (53.7) (35.5) (*) Refer to Note 20 Restated information (a) Includes settlements paid as part of the voluntary departure plan for an aggregate amount of million. (b) Of which: 75.0 million of commercial paper, 22.2 million of reverse factoring, 157,2 million related to restructuring of swaps, (129,6) million of early redemption call premium as of September 30, 2018 compared to respectively million, million and million of financial income related to monetization of derivative instruments as of September 30, 2017, 4

7 Notes to the condensed consolidated financial statements 1. Basis of preparation of the consolidated financial statements 6 2. Significant events of the period Change in scope Revenue Reconciliation of operating income to Adjusted EBITDA Financial income Income tax expense Other non-current assets Cash and cash equivalents Equity Financial liabilities Derivative instruments Provisions Related party transactions Commitments and contractual obligations Litigation Entity consolidating the financial statements List of consolidated entities Subsequent events Restated information 28 5

8 1. Basis of preparation of the consolidated financial statements On February, , the company s Board of Directors, decided to rename SFR Group S.A. in Altice France S.A. Altice France (hereinafter the Company or the Group ) is a limited liability corporation (société anonyme) formed under French law in August 2013 with headquarters in France. Created subsequent to the merger of Numericable and SFR, the Group Altice France aims to become, on the back of the largest fiber optic network and a leading mobile network, the national leader in France in very-high-speed fixed-line/mobile convergence. The Group has major positions in all segments of the French B2C, B2B, local authorities and wholesale telecommunications market. Altice France is also adopting a new and increasingly integrated model around access and content convergence. Its division Media includes SFR Presse companies, which cover the Group s Press activities in France (Groupe l Express, Libération, etc) and NextRadioTV, which covers the Group s audiovisual activities in France (RMC Sport, BFM TV, BFM Business, BFM Paris, RMC, RMC Découverte,...). On January 8, 2018, Altice N.V. announced the separation of American businesses from European businesses, Altice N.V. becoming then Altice Europe N.V. («Altice Europe»). As of September 30, 2018, Altice Europe directly or indirectly held 100% of the capital of Altice France S.A. This Note describes the changes in the accounting principles adopted by the Group for the interim consolidated financial statements for the nine-month period ended September 30, 2018 based on the annual consolidated financial statements for the year ended December 31, Basis of preparation of financial information On November 09, 2018, the Company s Board of Directors approved the interim condensed consolidated financial statements for the nine-month period ended September 30, The interim condensed consolidated financial statements for the nine-month period ended September 30, 2018 were prepared in accordance with IAS 34 Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) and adopted by the European Union (EU). They should be read in conjunction with the Group s 2017 annual consolidated financial statements. The interim condensed consolidated financial statements were prepared in accordance with the same principles as for December 31, 2017, excepted for new standards effective on January 1, The Group has applied for the first time IFRS 15 - Revenue from Contracts with Customers and IFRS 9 - Financial Instruments, leading to restate the consolidated financial statements of previous periods. As IAS 34 requires, the nature and impact of these restatements are presented in Note 20 Restated Information Use of estimates and judgements In preparing the Group s financial statements, Management makes estimates insofar as many factors included in the financial statements cannot be measured accurately. The assumptions on which key estimates are based are the same as those described in Note 3 Use of estimates and judgements of the consolidated financial statements for the year ended December 31, 2017, excepted for new assumptions related to IFRS 15. Management reviews such estimates as the circumstances on which they are based change or as a result of new information or additional experience. Consequently, the estimates made as of September 30, 2018 may be significantly modified in subsequent periods, and actual amounts may differ from estimates. In addition to the description in Note 3 Use of estimates and judgment of the annual consolidated financial statements and with respect to revenue recognition, judgment and estimates are made for the determination of the enforceable period that is used for the recognition of contract assets and the amortization of the contract costs. 6

9 1.3. New standards and interpretations Standards and interpretations applied from January 1, 2018 The application from January 1, 2018 of the mandatory standards and amendments are listed below and will leaid to a change of accounting policies as presented in Note 2 Accounting policies and methods in annual consolidated financial statements IFRS 15 - Revenue from Contracts with Customers In May 2014, the IASB issued IFRS 15 which establishes a single comprehensive 5-step model to account for revenue arising from contracts with customers. IFRS 15 supersedes all current revenue recognition guidance including IAS 18 - Revenue, IAS 11 - Construction Contracts and the related Interpretations. Revenue recognition Revenue from the Group s activities mainly consists of services (telephone packages, TV subscriptions, highspeed Internet, telephony and installation services), equipment sales and telecommunications network leases. Since the acquisitions of Altice Media Group France (became SFR Presse) and NextRadioTV during the fiscal year 2016, revenue from the Group s activities integrates products such as magazines and dailies, advertising revenues and other related services. Revenue corresponds to the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group s activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating intragroup sales between entities included in the scope of consolidation. In accordance with IFRS 15, the revenue recognition model includes five steps for analyzing transactions so as to determine when to recognize revenue and at what amount: Identifying the contract with the customer, Identifying separate performance obligations in the contract, Determining the transaction price, Allocating the transaction price to separate performance obligations, Recognizing revenue when the performance obligations are satisfied. For bundled packages, the Group accounts for individual products and services separately if there are distinct i.e. if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it. The consideration is allocated between separate products and services in a bundle based on their stand-alone selling prices. The stand-alone selling prices are determined based on the market prices at which the Group sells the mobile devices and telecommunications services. This leads to the recognition of a contract asset a receivable arising from the customer contract that has not yet legally come into existence in the statement of financial position. The contract asset is reversed over the enforceable period. Enforceable period has been determined for each company. It represents the period over which rights and obligation are enforceable. This period is determined not only by the commitment period as stated in the contract but also by business practices and contracts mechanisms (early renewal, exit options, penalties and other clauses). Revenues from Mobile devices The Group recognizes revenues when a customer takes possession of the device. This usually occurs when the customer signs a new contract. The amount of revenue includes the sale of mobile devices and ancillary equipment for those devices. For mobile devices sold separately, customers pay in full at the point of sale or in several installments (credit agreement). For mobile devices sold in bundled packages, customer usually pay monthly in equal installments over the contractual period. Revenue from services Revenues from subscriptions for basic cable services, digital television pay, Internet and telephony (fixed and mobile) are recognized in revenue on a straight-line basis over the subscription period; revenues from telephone calls are recognized in revenue when the service is rendered. 7

10 Installation revenue Installation service revenue is deferred and recognized over the benefit period. For B2B customers, the benefit period is the contract term. For B2C, the benefit period is less than one year. Agent versus principal The Group determines whether it is acting as a principal or as an agent. The Group is acting as a principal if it controls a promised good or service before they are transferred to a customer. Indicators for acting as a principal include: (i) the Group is primarily responsible for fulfilling the promise to provide the specified good or service, (ii) the Group has inventory risk in the specified good or service and (iii) the Group has discretion in establishing the price for the specified good or service. On the other hand, the Group is acting as an agent or an intermediary, if these criteria are not met. When the Group is acting as an agent, revenue is presented on a net basis in the statement of income. When the Group is acting as principal, revenue is presented on a gross basis. Contract costs The Group recognizes as an asset the incremental costs of obtaining a contract with a customer if it expects to recover those costs. The incremental costs of obtaining a contract are those costs that the Group incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained. Commissions to third parties and sales incentives to internal employees are considered as costs to obtain a contract and are recognized under the balance sheet caption contract costs. Assets recognized as contract costs are amortized on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. The asset may relate to goods or services to be transferred under a specific anticipated contract. The amortization charge is recognized in the income statement caption Depreciation, amortization and impairment. As a practical expedient, the Group recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Group otherwise would have recognized is one year or less. The Group has adopted IFRS 15 for annual period beginning on January 1, 2018, in accordance with the full retrospective method by restating each prior period and recognize the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of equity at the beginning of the earliest period presented (January 1, 2017, refer to Note 20 Restated Information) IFRS 9 - Financial Instruments IFRS 9 - Financial Instruments issued on July 24, 2014 is the IASB s replacement of IAS 39 - Financial Instruments: Recognition and Measurement. The Standard includes requirements for recognition and measurement, impairment, de-recognition and general hedge accounting regarding financial instruments. IFRS 9 allows two methods for measurement: Amortized cost: this is the original amount minus principal repayments, cumulative amortizations and impairments. The amortized cost must be determined by using the effective interest rate method, Fair value: this is the amount for which an asset could be exchanged or a liability paid, between two willing parties, in an arm s length transaction. Classification and measurement Except for certain trade receivables, under IFRS 9, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Under IFRS 9, debt financial assets are subsequently measured at fair value through profit or loss (FVPL), amortised cost, or fair value through other comprehensive income (FVOCI). The classification is based on two criteria: the Group s business model for managing the assets; and whether the instruments contractual cash flows represent solely payments of principal and interest on the principal amount outstanding (the SPPI criterion ). 8

11 The new classification and measurement of the Group s debt financial assets are, as follows: Debt instruments at amortised cost for financial assets that are held within a business model with the objective to hold the financial assets in order to collect contractual cash flows that meet the SPPI criterion. This category includes the Group s Trade and other receivables, and Loans included under balance sheet caption Financial assets (non-current and current portion). Debt instruments at FVOCI, with gains or losses recycled to profit or loss on derecognition. The Group has no instrument in this new category. Other financial assets are classified and subsequently measured, as follows: Equity instruments at FVOCI, with no recycling of gains or losses to profit or loss on derecognition. This category only includes equity instruments, which the Group intends to hold for the foreseeable future and which the Group has irrevocably elected to so classify upon initial recognition or transition. The Group classified its quoted and unquoted equity instruments as equity instruments at FVOCI. Equity instruments at FVOCI are not subject to an impairment assessment under IFRS 9. Under IAS 39, the Group s unquoted equity instruments were classified as AFS financial assets. Financial assets at FVPL comprise derivative instruments. This category would also include debt instruments whose cash flow characteristics fail the SPPI criterion or are not held within a business model whose objective is either to collect contractual cash flows, or to both collect contractual cash flows and sell. The assessment of the Group s business models was made as of the date of initial application, 1 January The assessment of whether contractual cash flows on debt instruments are solely comprised of principal and interest was made based on the facts and circumstances as at the initial recognition of the assets. The accounting for the Group s financial liabilities remains largely the same as it was under IAS 39. Similar to the requirements of IAS 39, IFRS 9 requires contingent consideration liabilities to be treated as financial instruments measured at fair value, with the changes in fair value recognized in the statement of profit or loss. Under IFRS 9, embedded derivatives are no longer separated from a host financial asset. Instead, financial assets are classified based on their contractual terms and the Group s business model. The accounting for derivatives embedded in financial liabilities and in non-financial host contracts has not changed from that required by IAS 39. Impairment The adoption of IFRS 9 has changed the Group s accounting for impairment losses for financial assets by replacing IAS 39 s incurred loss approach with a forward-looking expected credit loss (ECL) approach. IFRS 9 requires the Group to record an allowance for ECLs for all loans and other debt financial assets not held at FVPL. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then discounted at the asset s original effective interest rate. For Contract assets and Trade and other receivables, the Group has applied the standard s simplified approach and has calculated ECLs based on lifetime expected credit losses. The Group has established a provision matrix that is based on the Group s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. Hedge accounting As allowed under IFRS 9, the Group continues to apply the requirement of IAS 39 related to hedge accounting. Financial liabilities restructuring Based on the IFRS 9, the Group removes a financial liability (or a part of a financial liability) from its statement of financial position when, and only when, it is extinguished ie when the obligation specified in the contract is discharged or cancelled or expires. An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. 9

12 The Group implemented the standard based on the simplified retrospective approach (refer to Note 20 Restated Information). Standards and interpretations not yet applied The Group has not early adopted the following standards and interpretations, for which application is not mandatory for period started from January 1, 2018 and that may impact the amounts reported. IFRS 16 - Leases, effective on or after January 1, 2019; Annual improvements cycle , effective on or after January 1, 2019; IFRIC 23 - Uncertainty over Income Tax Treatments, applicable for annual periods beginning on or after January 1, IFRS 9 amendments - Prepayment Features with Negative Compensation, effective on or after January 1, The impacts of implementing these news standards and amendments are currently being analysed by the Group. It is not practicable to provide a reasonable estimate of the quantitative effects of IFRS 16 until the project has been completed. 2. Significant events of the period Altice Group Reorganization On January, Altice Europe announced: That existing sports content wholesale contracts between Altice France and Altice TV would be cancelled and replaced by new contracts ( revenue sharing ) with a lower guaranteed minimum income. Altice TV will be eligible to receive an indemnity of million as part of the renegotiation (this amount has been recorded as expenses as of March 31, 2018); The reorganization of its structure comprising Altice France, Altice International and Altice TV; The planned acquisition by Altice France of the shares held by Altice International in Outremer Telecom, Altice Technical Services (France) and Altice Customer Services. Agreement with ARCEP concerning Zones blanches sites On January 14, 2018, Altice France, along with the operators in the French telecom market, reached an agreement with the French telecom regulator ( ARCEP ) and the French state in order to improve mobile coverage in certain poorly covered mobile areas ( Zones blanches ), in exchange for concessions on future mobile spectrum auctions and the scrapping of a specific spectrum based tax for the new sites deployed as part of this initiative ( IFER ). As part of the deal, and in exchange for a prolongation of the existing spectrums bands (900/1800/2100 Mhz), the Group has agreed to generalize 4G coverage on all the mobile sites (and 75% of the Zones blanches sites) in 2020 and the implementation of 4G on all Zones blanches site by Altice France sold its international wholesale voice carrier business On March 12, 2018, Altice Europe and Altice France announced that they had entered into exclusivity with Tofane Global, a Paris-based telecommunications and digital player specializing in international carrier services, for the sale of its international wholesale voice carrier business in France. This transaction shows further execution of the Group s non-core asset disposal program to strengthen the company s long-term balance sheet position and focus on improving the operational and financial results of its key franchises. The transfer of assets to SFR International Carrier Services and its sale to Tofane Global were finalized on September 12, The disposal price amounted to 21.3 million. Exclusive control over NextRadioTV S.A. The convergence between the Group s telecoms and media offerings was initiated in 2015 with Altice Europe s acquisition of a 49% stake in NextRadioTV S.A. ( NextRadioTV ) (which was subsequently acquired by the Group in 2016). In furtherance of this convergence strategy, the Group has taken the following steps to take exclusive control of NextRadioTV through the joint venture Group News Participations ( GNP ). 10

13 On January 30, 2017, the Group announced that it intended to take over exclusive control of NextRadioTV and, to that effect, had filed the necessary application with the Conseil Supérieur de l Audiovisuel ( CSA ) and the French Competition Authority in order to obtain their clearance of the proposed transaction. On June 13, 2017, the French Competition Authority granted its clearance and authorized the transaction. On April 5, 2018, Altice France acquired the minority stake held by News Participations S.A.S. in Altice Content Luxembourg S.A. for the amount of million by exercising the call option it held on News Participation s 25% stake in Altice Content Luxembourg, following which Altice Content Luxembourg has become a whollyowned subsidiary of Altice France. Altice Content Luxembourg is an indirect parent of NextRadioTV and the direct parent of GNP. On April 20, 2018, the CSA granted its clearance and authorized the transaction. On May 31, 2018, the Group consummated the acquisition of the remaining 51% stake in NextRadioTV (via a conversion of convertible bonds). The Group has been consolidating the results of GNP in application of IFRS 10 since May 2016, hence this authorization does not have any impact on the financial statements, except for a reclassification of non controlling interests to Group equity.the net impact of the operation was (29.6) million (refer to statement of changes in equity). In the event of a change in control, the French Labor code (L ) allows journalists to activate a five-year Exit clause ( clause de cession ). As of September 30, 2018, the Group considers that the associated financial risk is difficult to estimate and unlikely to be material as a whole and is hence considered to be a contingent liability under IAS 37. Disposal of i24news to Altice USA On April 23, 2018, the Group completed the sale of i24news, an Israeli international 24-hour news and current affairs television channel, to Altice USA for a total consideration of $2.5 million. Closing of the previously announced acquisitions of Altice Customer Services and AlticeTechnical Services France On May 16, 2018 the Group successfully closed the previously announced acquisitions of Altice Customer Services and Altice Technical Services France. Altice France acquired a 65.0% stake in the capital of Altice Customer Services from Altice International for a total consideration of 64.5 million, of which 30.0 million served as consideration for the shares of the company and 34.4 million served as consideration for financial assets held by Altice International against Altice Customer Services. The seller has agreed to issue a vendor note with a maturity under one year to Altice France for the total amount of the consideration transferred. The fair value of put and call options on the 35.0% minority interest, not held by Altice before the transaction, have been booked in equity for a negative amount of 23.6 million. Altice Customer Services comprises mainly of companies of the Intelcia group, a French language-focussed player in the customer relations management outsourcing industry. Altice France also acquired a 100% stake in Altice Technical Services France ( ATSF ) from Altice International for a total consideration of million. The seller has agreed to issue a vendor note with a maturity under one year to Altice France for the total amount of the consideration transferred. Altice Technical Services France is an all-round technical services company offering among others network deployment, upgrade and maintenance for the telecommunications industry. Implementation of separation of Altice Europe and Altice USA On January 8, 2018, Altice Europe announced the separation of Altice USA from Altice Europe. The separation was effected by a spin-off of Altice Europe s 67.2% interest in Altice USA through a distribution in kind to Altice Europe shareholders. Altice Europe announced completion of the Spin-Off on June 8, The Altice Europe Group will reorganize its structure comprising the Group Altice France (including SFR, Altice Technical Services France, Altice Customer Services and, following consummation of the FOT Acquisition, the 11

14 FOT Business), Altice International and its consolidated subsidiaries and Altice TV and its consolidated subsidiaries (including AENS). Tower assets transaction On June 20, 2018, Altice France entered into an exclusivity and put option agreement with Starlight BidCo S.A.S., an entity controlled by funds affiliated with KKR for the sale of 49.99% of the shares in a newly incorporated tower company SFR TowerCo that will comprise 10,198 sites currently operated by the Group. The envisaged transaction values SFR TowerCo at an enterprise value of 3.6 billion. In addition, a build-to-suit agreement for 1,200 new sites between the Group and SFR TowerCo is expected to generate approximately 250 million in additional proceeds to the Group within the next four years. In connection with this transaction, Altice France and the Starlight BidCo will enter into a shareholders agreement relating to the management of SFR TowerCo and certain other matters, which will, inter alia, provide Starlight BidCo with consent rights intended to protect its financial interest over specified matters relating to the operation and financing of SFR TowerCo. In addition, SFR TowerCo and the Group will enter into a 20-year master services agreement for the hosting, site development and ancillary services to be provided by SFR TowerCo to the Group as tenant. Altice France intend to fully consolidate SFR TowerCo. The closing of the towers transaction will be subject to customary conditions precedent, including that at least 90% of the sites have been contributed to SFR TowerCo (this threshold was reached at the end of October), as well as regulatory approvals and is expected to occur in the financial year ending December 31, New employment commitment On June 22, 2018, the Group entered into an agreement providing a new commitment to the unions to maintain its current number of employees (9,428 as of June 30, 2018) until December 31, Under this agreement, the Group has also provided a commitment to the effect that if it undertakes any minor restructuring, its employees will benefit from certain support and structured departure processes. Agreement with Orange for the deployment of Fiber in AMII zones At the end of June, SFR and Orange signed an agreement to extend their FTTH (Fiber to The Home) deployments outside very densely populated areas ( ZTD ). This agreement concerns part of the moderately dense areas ( AMII ) which was not covered under the agreement signed by SFR and Orange in The area concerned has 2.9 million housing units or business premises which will now be distributed as follows: 1.83 million homes or business premises will be deployed by Orange in 363 municipalities; 1.07 million homes or business premises will be deployed by SFR in 291 municipalities. SFR undertooke to finalize the 1.07 million housing and business premises by the end of Refinancing of 2022 Notes and restructuring of associated cross currency swaps On July 16 and July 18, 2018, the Group announced that it had successfully completed the issuance of new term loans and bonds with the intention of redeeming its USD and EUR denominated Senior Secured Notes due in The Group issued a USD term loan for a nominal amount of $2,500 million with and interest rate of Libor 3m+4.00% falling due in 2026 and two Senior Secured Notes, a $1,750 million note with a coupon of 8.125% falling due in 2027 and a 1,000 million note with a 5.875% coupon also falling due in The proceeds from these issuances were used to fully redeem its $4,000 million May % Senior Secured Notes and the 1,000 million May % Senior Secured Notes. The transactions were approved by the board of the Group on July 6, 2018 and were closed in August Additionally, cross currency interest rate swaps issued by the Group to hedge the dollar denominated debts were also restructured in order to reflect the new conditions of the new debt instruments. 12

15 As part of these transactions, the Group recorded a non recurring expense of 145 million related to the restructuring of the debt and a net non recurring expense of 8 million related to the restructuring of the cross currency swaps (refer to Note 12 Derivative instruments for more details). 3. Change in scope Over the nine-month period ended September 30, 2018, the changes in the consolidation scope are described as follows: Acquisition under common control of the group Altice Customer Services; Acquisition under common control of the group Altice Transaction Services France; Acquisition under common control of Ma Chaîne Sport; Additional participation in ACL et GNP; Additional participation in DTV holding (Ex PHO Holding); Additional participation in ERT Luxembourg; Two new DSP s entry in the consolidation scope (Martinique THD and Connect 76); Transfer of all assets and liabilities ( Transmission Universelle de Patrimoine ) of Decovery, Technologues Culturels and Forum Investissement to Groupe l Express; Transfer of all assets and liabilities ( Transmission Universelle de Patrimoine ) of Futur telecom and 2SIP to SFR; Transfer of all assets and liabilities ( Transmission Universelle de Patrimoine ) of SIG50 to Altice France; Transfer of all assets and liabilities ( Transmission Universelle de Patrimoine ) of PMP to PMP Holding; Transfer of all assets and liabilities ( Transmission Universelle de Patrimoine ) of PMP Holding to HolcoB; Creation of the company SFR International Carrier Services followed by a sale to Tofane Global; Disposal of i24news to Altice USA. The consolidation scope updated is presented in Note 18 List of consolidated entities. Acquisition under common control The acquisitions of Altice Customer Services (hereinafter ACS ), of Altice Technical Services France (hereinafter ATSF ) were considered as business combinations under common control as defined by the IFRS standards and, in this respect, excluded from the scope of application of the revised IFRS3. These transactions were recorded in the consolidated financial statements at historic accounting values for the two sub-groups in order to, as indicated in IAS 8, disclose the most relevant information. The treatment was as follows: The combination date is the acquisition date; The purchaser is Altice France; The values adopted for newly-consolidated companies are the carrying amounts in the consolidated financial statements of Altice International for ACS,and ATSF on the acquisition date; No new goodwill is generated by these transactions and the difference between the acquired net position and the acquisition price of securities is allocated to equity. No pro forma information was prepared given that these entries into the scope are immaterial at group level. The consolidated statement of income includes five months of activity for ACS and ATSF. 13

16 The impact of the entry of ACS and ATSF in to the scope is broken down below: ACS ATSF (in millions) Net value (in millions) Net value Non-current assets 66.4 Non-current assets 20.3 Current assets Current assets Assets Assets Non-current liabilities 51.3 Non-current liabilities 5.5 Current liabilities Current liabilities Liabilities Liabilities Equity acquired (a) 39.9 Equity acquired (a) 91.3 Acquisition share's price (b) 30.0 Acquisition share's price (b) Impact on equity (a) - (b) 9.9 Impact on equity (a) - (b) (83.5) - Equity, Group share Equity, Group share (91.7) - Non-controlling interests (0.9) - Non-controlling interests 8.1 The goodwill included in the non-current assets of ACS and ATSF amounts to, respectively 26.8 million and 72.9 million. As described in Note 2 Significant events of the period, concerning ACS, an additional impact on equity has been booked for a negative amount of 23.6 million (Fair value of the put and call option on non-controlling interests). Concerning ATSF, an additional impact on equity has been booked to record a deferred tax asset of 21.6 million related to the elimination of margins on intercompany transactions. MCS The acquisition of the entity Ma Chaine Sport ( MCS ) by SportCoTV, subsidiary of GNP to AENS, subsidiary of Altice International was considered as business combinations under common control as defined by the IFRS standards and, in this respect, excluded from the scope of application of the revised IFRS3. The treatment is explained above. The impact of the entry of MCS amounts to (14.9) million on the Group s share equity. As the other impacts in the statement of financial position are no significant, this statement is not disclosed. No pro forma information was prepared given that this entry into the scope is immaterial at group level. The consolidated statement of income includes three months of activity for MCS. 4. Revenue The breakdown of revenue is detailed as follows: Revenues September 30, September 30, ( m) restated Mobile-service 2, ,117.1 Mobile-equipment sales Fixe 2, ,080.2 Wholesale ,001.3 Media Other Total 7, ,113.1 The line «Other» now includes the consolidated revenues of ACS and ATSF. As of September 30, 2018, this revenue concerns mainly ACS. 14

17 5. Reconciliation of operating income to Adjusted EBITDA The following table shows the reconciliation of the operating income in the Condensed Consolidated Financial Statements to Adjusted EBITDA: Reconciliation of Operating income to Adjusted Ebitda September 30, September 30, ( m) restated Operating income (305.6) Depreciation, amortization and impairment 1, ,005.6 Restructuring costs Costs relating to stock option plans Other non-recurring costs (a) Adjusted EBITDA 2, ,668.5 (a) As of September 30, 2018, mainly include the neutralization of the break-up fee with Altice Entertainment News & Sport ( (300.0) million), net reversal of provision related to litigation ( 99.4 million), costs related to the change in office premises to the new Altice Campus ( (32.9) million) and net loss on share disposals ( (40.3) million, including i24 News) Refer to Note 2 Significant events of the period and Note Other disputes. The definition of Adjusted EBITDA has been revised in accordance with Altice Europe accounting policies: management fees are now excluded from Adjusted EBITDA. As a reminder, the amount of management fees was nil as of September 30, Financial income Financial income is broken down below: Financial Income September 30, September 30, ( m) restated Cost of gross financial debt (600.8) (666.3) Financial income Provisions and unwinding of discount (18.4) (12.6) Other (192.2) (28.2) Other financial expenses (210.6) (40.8) Net financial income (expense) (806.4) (703.7) The cost of gross financial debt decreased from million as of September 30, 2017 to million as of September 30, 2018, mainly as a result of the refinancing of debts carried out during the course of 2017, which lead to a decrease in the cost of debt for the Group. Other financial expenses increased for the period ended September 30, 2018 mainly include a non recurring expense of 145 million related to the refinancing of the 2022 notes. See notes 2 Significant events of the period and note 11 Financial liabilities for more information. 7. Income tax expense For interim condensed financial statements, the tax expense or tax income on profit or loss is determined in accordance with IAS 34, based on the best estimate of the annual average tax rate expected for the full fiscal year, restated for non-recurring items (which are recorded in the period as incurred). 8. Other non-current assets Other non-current assets are detailed as follows: September 30, December 31, (in millions) restated Derivative financial instruments (a) Other Non-current financial assets Other non-current assets (b) Other non- current assets

18 (a) (b) Of which million related to swaps (Refer to Note 12 Derivative instruments) and 15.9 million related to the call option linked to ACS (Refer to Note 2 Significant events of the period). Includes mainly non-current prepaid expenses. 9. Cash and cash equivalents Cash and cash equivalents are broken down below: Cash and Cash Equivalent September 30, December 31, ( m) restated Cash Cash equivalents (a) Cash and cash equivalents (a) Cash equivalents mainly consisted of money-market UCITS. 10. Equity As of September 30, 2018, Altice France s share capital amounted to 443,706,618 comprising 443,706,618 ordinary shares with a par value of 1.0 each. There was no change on share capital over the nine-month period. 11. Financial liabilities Financial liabilities breakdown Financial liabilities break down as follows: Current Non-current Total September 30, December 31, September 30, December 31, September 30, December 31, ( m) restated restated restated Bonds , , , ,267.2 Term loans (a) , , , ,082.4 Derivative instruments Borrowings , , , ,205.8 Finance lease liabilities Perpetual subordinated notes ("TSDI") Deposits received from customers Bank overdrafts Securitization Reverse factoring Commercial paper Other (b) Other financial liabilities 1, , , ,355.1 Financial liabilities 1, , , , , ,560.8 (a) This amount includes 75.0 million of RCF as of September 30, 2018 (nil at December 31, 2017). (b) As of September 30, 2018, this amount includes of vendor loans (including accrued interests) related to the acquisitions of ACS and ATSF, 39.5 million related to the put option on ACS s minority interests and 37.2 million debts on the repurchase of ERT Luxembourg minority interests. Financial liabilities issued in US dollars are converted at the following closing rate: As of September 30, 2018: 1 = USD As of December 31, 2017: 1 = USD 16

19 On August 15, 2018, the Group successfully completed the refinancing of its 2022 dollar and euro denominated notes through the issuance of new euro and dollar denominated notes and a new dollar term loan. The new notes have the following characteristics: - Euro denominated notes due in 2027 with a nominal of 1,000 million and paying a coupon of 5.875%; - Dollar denominated notes due in 2027 with a nominal of 1,750 million and paying a coupon of 8.125%; - Dollar denominated Term Loan ( TLB13 ) due in 2026 with a nominal of 2,500 million and paying a coupon of USD Libor 3m %. The notes were issued at par and the term loan with an OID of 2.5%. The refinancing operation was treated as an extinguishment of debt by the Group, following the provisions of IFRS9. The Group exercised the early redemption call option in order to repay the 2022 notes and thus paid a call premium of 103% for the dollar notes and % for the euro notes for an aggregate amount of 130 million. Additionally, unamortised issuance costs that were capitalized as part of the initial issuance of the 2022 notes were directly expensed through the consolidated statement of profit and loss for an amount of 16 million Net financial debt Net financial debt as defined and utilized by the Group can be broken down as follows: September 30, December 31, ( m) restated Bonds 9, ,038.1 (a) (b) Term loans 7, ,102.9 Finance lease liabilities Commercial paper Bank overdrafts Other financial liabilities Financial Liabilities contributing to net financial debt (a) 17, ,380.9 Cash and cash equivalents Net derivative instruments - currency translation impact Financial Assets contributing to net financial debt (b) 1, Net financial debt (a) (b) 15, ,383.0 Liability items correspond to the nominal value of financial liabilities excluding accrued interest, impact of EIR, perpetual subordinated notes, operating debts (notably guarantee deposits, securitization debts and reverse factoring) and debt on ACS and ATSF share purchase. All these liabilities are converted at the closing exchange rates. Refer to Note 11.3 Reconciliation between net financial liabilities and net financial debt. Asset items consist of cash and cash equivalents and the portion of the fair value of derivatives related to the currency impact ( million as of September 30, 2018 and million as of December 31, 2017). The fair value of derivatives related to the interest rate impacts (877.5) million as of September 30, 2018 and (753.0) million as of December 31, 2017 is not included. 17